The Ontology of Economics

Earlier this year I opined on twitter that economists are essentially philosophers with full employment:

Jokes aside, my glaring omission, of course, was ontology. Ontology is the subset of philosophy concerned with the nature and categories of being and existence. In the case of economics, the core ontological preoccupation is with the nature and existence of market equilibria and their constituent parts: supply and demand, institutions, representative agents, social planners, and so on. Some focus on ontologies of being, like a static equilibrium, while Hayek and Buchanan famously had ontologies of becoming that emphasized the importance of analyzing economic processes. Others debate the gestalt between whole markets and individual exchanges — supply and demand curves versus a game theory model of bargaining, say. Others-still question the reality of economic “absences,” like productivity measurements produced as a statistical residual, or the output gap between real and potential GDP.

Economic ontology therefore touches on every aspect of economic thinking and analysis, and as such the biggest rifts in economics often come down to mutually incompatible ontological commitments. For instance, I once read a polemic against Keynesian economics that proclaimed matter of factly that the macroeconomy “doesn’t exist,” that it’s nothing more than a metaphor for a complex aggregation of individual interactions. Well — no duh. Individuals are aggregations of complex biochemical interactions, as well, but that doesn’t make them any less real. Much like debating the point at which a collection of individual grains becomes a heap — there simply is no fact of the matter.

As in the example above, it’s important to be able to discern the difference between a category mistake (like attributing motives to GDP or the fallacy of composition) and a difference in construal (like acknowledging aggregates exist in the first place). More often than not, the existential quantifier (or dubbing something “real”) is less about proposing an object as genuinely more or less fundamental and more about raising or lowering that object’s social status. This may be incredibly useful in the context of rhetoric and persuasion, but it is usually safer to embrace a plurality of ontologies as equally valid based on use and context.

That is, economists should be ontological pluralists. And self-consciously so.

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